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Reasons Why You Should Avoid Betting on Emerson (EMR) Now
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Emerson Electric Co. (EMR - Free Report) has failed to impress investors with its recent operational performance due to persistent supply-chain constraints, raw material cost inflation and foreign-currency headwinds. These factors are likely to adversely impede its earnings in the quarters ahead.
The current Zacks Rank #5 (Strong Sell) player has a market capitalization of $56.4 billion.
Let’s discuss the factors that might continue taking a toll on the firm.
Cost inflation poses a concern for Emerson. In fiscal 2022 (ended Sep 30, 2022), the company’s cost of sales rose 7.2% year over year. Supply chain, logistics and labor constraints adversely impacted its global operations in the quarter. The effects of supply-chain restrictions and logistics cost increases are likely to continue hurting its margins and profitability in the near term.
Emerson is undertaking restructuring measures to improve operational efficiency, reduce the workforce, increase the asset base worldwide and fight the pandemic-related challenges. However, those measures are impacting its bottom line. Restructuring expenses totaled $80 million in fiscal 2022, affecting the company’s earnings by 15 cents. In fiscal 2023 (ending September, 2023) restructuring expenses are expected to hurt earnings by 13 cents per share.
Given its widespread presence in the international markets, Emerson is exposed to unfavorable foreign currency movements. In fiscal 2022, adverse movement in foreign currency translation hurt its sales 2%. In the quarters ahead, EMR's overseas business might be depressed by a stronger U.S. dollar.
AIT’s earnings estimates have increased 4.6% for fiscal 2023 in the past 60 days. Shares of Applied Industrial have risen 40.4% in the past six months.
IDEX Corporation (IEX - Free Report) presently has a Zacks Rank #2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 1.9% for 2022. The stock has rallied 29.1% in the past six months.
EnerSys (ENS - Free Report) delivered an average four-quarter earnings surprise of 2.1%. ENS presently carries a Zacks Rank of 2.
ENS’ earnings estimates have increased 0.6% for fiscal 2023 in the past 60 days. The stock has gained 25.5% in the past six months.
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Reasons Why You Should Avoid Betting on Emerson (EMR) Now
Emerson Electric Co. (EMR - Free Report) has failed to impress investors with its recent operational performance due to persistent supply-chain constraints, raw material cost inflation and foreign-currency headwinds. These factors are likely to adversely impede its earnings in the quarters ahead.
The current Zacks Rank #5 (Strong Sell) player has a market capitalization of $56.4 billion.
Let’s discuss the factors that might continue taking a toll on the firm.
Cost inflation poses a concern for Emerson. In fiscal 2022 (ended Sep 30, 2022), the company’s cost of sales rose 7.2% year over year. Supply chain, logistics and labor constraints adversely impacted its global operations in the quarter. The effects of supply-chain restrictions and logistics cost increases are likely to continue hurting its margins and profitability in the near term.
Emerson is undertaking restructuring measures to improve operational efficiency, reduce the workforce, increase the asset base worldwide and fight the pandemic-related challenges. However, those measures are impacting its bottom line. Restructuring expenses totaled $80 million in fiscal 2022, affecting the company’s earnings by 15 cents. In fiscal 2023 (ending September, 2023) restructuring expenses are expected to hurt earnings by 13 cents per share.
Given its widespread presence in the international markets, Emerson is exposed to unfavorable foreign currency movements. In fiscal 2022, adverse movement in foreign currency translation hurt its sales 2%. In the quarters ahead, EMR's overseas business might be depressed by a stronger U.S. dollar.
Emerson Electric Co. Price and Consensus
Emerson Electric Co. price-consensus-chart | Emerson Electric Co. Quote
In the past 60 days, the Zacks Consensus Estimate for fiscal 2023 earnings has been revised 24.9% downward.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 24.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
AIT’s earnings estimates have increased 4.6% for fiscal 2023 in the past 60 days. Shares of Applied Industrial have risen 40.4% in the past six months.
IDEX Corporation (IEX - Free Report) presently has a Zacks Rank #2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 1.9% for 2022. The stock has rallied 29.1% in the past six months.
EnerSys (ENS - Free Report) delivered an average four-quarter earnings surprise of 2.1%. ENS presently carries a Zacks Rank of 2.
ENS’ earnings estimates have increased 0.6% for fiscal 2023 in the past 60 days. The stock has gained 25.5% in the past six months.